Samsung killing Galaxy Note 7 due to fire hazard

Costly setback creates opportunity for competitors' sales increases

A customer tries out a Samsung Electronics’ Galaxy Note 7 at the company’s headquarters in Seoul, South Korea, October 10, 2016. (REUTERS/Kim Hong-Ji)
A customer tries out a Samsung Electronics’ Galaxy Note 7 at the company’s headquarters in Seoul, South Korea, October 10, 2016. (REUTERS/Kim Hong-Ji)

LOS ANGELES — In an extremely costly setback, Samsung Electronics said it will permanently end the production of its Galaxy Note 7 smartphone line.

The move, announced Tuesday, comes after the company bungled a massive recall of the devices, whose batteries posed a risk of overheating and bursting into flames. Samsung last month recalled 2.5 million of the devices and began issuing replacement units, but the replacement Galaxy Note 7s experienced the same battery problems as the original models.

Apple stands to see in surge in iPhone 7 sales because of Samsung’s problems, as Galaxy Note 7 users look for alternatives in the wake of the crisis. Google’s new Pixel phone also is likely to benefit, with the internet giant’s Android smartphones slated to begin shipping Oct. 20.

“Taking our customers’ safety as our highest priority, we have decided to halt sales and production of the Galaxy Note 7,” Samsung said in a regulatory filing. Samsung will continue to sell Galaxy S7 smartphones; the Galaxy Note 7, which began shipping in August and started at $850, had featured a 5.7-inch Super AMOLED display and a stylus.

On Monday, Samsung said it would “temporarily” halt production and sales of the Galaxy Note 7 following recent reports of the devices igniting, and later urged customers to switch off the devices as a precautionary measure. Then, the South Korean company officially said Tuesday that the product was being discontinued, a move that analysts say will cost Samsung billions and tarnish its brand globally.

Samsung’s stock tumbled 8 percent Tuesday on the Korea Exchange, its biggest single-day decline in eight years, as investors reacted to the full impact of the product debacle.

With the suspension of Galaxy Note 7 sales, Apple could sell 14 million to 15 million additional iPhone 7 smartphones over its 2017 fiscal year, which started Sept. 25, according to CFRA Research analyst Angelo Zino — up about 7 percent over previous forecasts.



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